Senate Dems: Give us tax hikes or you get no tax reform

posted at 12:41 pm on July 26, 2013 by Kevin Glass

Over the last two years, a groundswell of movement has happened behind the scenes on Capitol Hill. Rep. Dave Camp (R-Mich.) has been working to convince his colleagues of the need for tax reform. Recently, Max Baucus has begun to spearhead that same initiative on the Senate side. And indeed, with Orrin Hatch signed on, it has looked like this is something that could happen.

It’s important to note that we’re only talking about tax reform, not cuts. That’s what has kept this tenuous bipartisan movement together. The approach is largely revenue-neutral and would likely end up distributionally similar to what we have now. But with economists estimating that the cost of tax complexity could be up to $1 trillion every year, merely having a revenue-neutral and simpler tax code could be hugely beneficial for the American economy.

Senate Democrat leadership wants put a boot to all of this. Harry Reid and Chuck Schumer appeared yesterday to demand that any tax reform must actually be a tax hike, as reported by Bloomberg:

Any tax overhaul “has to be under the total understanding that this can’t be revenue-neutral,” said Reid, a Nevada Democrat. “It can’t be even close to neutral. It has to be a significant tax target.”

That target, according to Reid and Schumer, should be what the Senate Democrats’ tax-hiking budget aimed for – a tax hike of nearly $1 trillion. Needless to say, that’s a non-starter. Republicans in both the House and Senate agreed to more than $600 billion in tax hikes – mostly from upper-income-earners – on January 1 this year as part of the fiscal cliff deal.

Schumer and Reid’s bluster threatens to kill the tax reform movement before it has a real chance. If Democrats are going to marshal around the idea that the tax code is fine as it is and that Republicans will have to give up substantial tax hikes just to simplify the code, we’re not getting reform.

It’s too bad, too. The Baucus-Hatch plan in the Senate would challenge legislators to have to defend special interest tax subsidies on an individual basis. It’s an approach that’s been endorsed by the Alan Simpson/Erskine Bowles coalition. It would grow the economy without growing government revenues. And Senate Democrats would rather exact a pound of tax-hike flesh in order to allow it to happen.

This could all just be petty politics on the part of Reid and Schumer. Their supposed “baseline” for tax hikes is taken from the Senate Democrat budget that was passed this year because Republicans demanded it. Max Baucus was one of a few Senate Democrats who voted against the budget of the Senate Democrats. Baucus is retiring. This might just be Schumer & Reid’s last parting shot at a member of the Democrat caucus who has not always towed the party line.

Whether it’s their love of bad policy or merely the pettiness of personality politics, Schumer and Reid’s move is bad news for simplicity, reform, and economic growth.

Blowback

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Just as an aside – every time since the end of World War II that the federal tax take approached 20% of GDP, the economy entered a recession until the tax take fell well below the post-WWII historical 18.1% of GDP average.

“Schumer and Reid’s bluster threatens to kill the tax reform movement before it has a real chance. If Democrats are going to marshal around the idea that the tax code is fine as it is and that Republicans will have to give up substantial tax hikes just to simplify the code, we’re not getting reform.”

Are you kidding? This is great! Every Republican can run on “we think taxes are too complex. The Democrats think they’re great. Vote for us if you don’t like dealing with the IRS!”

- NO deductions — all non-profits become taxable(phase in over 5 years)
- CUT the IRS so that it only does random audits — eliminate ALL the provisions of Obamacare related to the IRS — Obamacare funding will come out of the flat tex

Are you kidding? This is great! Every Republican can run on “we think taxes are too complex. The Democrats think they’re great. Vote for us if you don’t like dealing with the IRS!”
Greg Q on July 26, 2013 at 12:55 PM

Since 47%+ of the population doesn’t deal with the IRS, that is a huge “don’t care” chunk of the populace right there.

And as far as that walking corpse and his overly-botoxed mannequin crack buddy go, they can both pound the entire Sahara, I’ll supply the sledgehammer for free.

Pretty damn sad what America has become when two complete jackass bugwits such as Reid and Schumer can get and stay elected as reps in our federal government. If those two criminal pedophiles were to start on fire in front of my house and I was holding a garden hose, I would water the plants and whistle a happy tune.

That target, according to Reid and Schumer, should be what the Senate Democrats’ tax-hiking budget aimed for – a tax hike of nearly $1 trillion. Needless to say, that’s a non-starter. Republicans in both the House and Senate agreed to more than $600 billion in tax hikes – mostly from upper-income-earners – on January 1 this year as part of the fiscal cliff deal.

If Harry Reid is on record as wanting HIGHER taxes, Republican candidates for Senate should hammer the Democrats by telling voters that the ONLY way to reduce taxes is to get a Republican majority in the Senate, after which Reid cannot singlehandedly prevent legislation from being brought to the Senate floor.

When will the pols learn that there isn’t enough money in the world to pay for current obligations AND continue to grow the government at this rate?

Just look at Social Security…

Beginning on 01.01.10 and extending through the end of 2020, 10,000 Americans will become eligible for Social Security (and Medicare, for that matter) every single day.

According to the CBO, baseline SS expenditures are projected to be:

$11 trillion over the next decade.

$20 trillion over the decade after that.

$34 trillion over the third decade.

For a grand total of $65 trillion on Social Security payments alone.

Medicare and Medicaid are even worse and throw Obamacare on top of that! What most people do not realise is that, if we were paying the same interest rate on the national debt that we were during the Clinton Era, debt service alone would eat up every dollar of tax revenue.

In 2010, John Kitchen of the US Treasury and Menzie Chinn of the University of Wisconsin published a study entitled:

By 2020, Kitchen and Chinn project the amount of US Treasury debt that foreign governments will have to buy in order to finance our spending and debt will have to rise to about 19 percent of the rest of the world’s GDP, which they say is . . . do-able . . . BUT TOTALLY NEVER GONNA HAPPEN UNREALISTIC.

Whether the rest of the world will want to do it is another matter. A future that presumes the rest of the planet will sink a fifth of its GDP into U.S. Treasuries is no future at all.

Progs always say that we are 5% of the world’s population, but use 25% of the planet’s resources, which, according to them, is a very bad, racist, oppressive, selfish, and mean thing to do.

Evidently, being 5% of the world’s population and expecting the equivalent of the Coolies to build our modern-day railroads, which are known as Obamacare, Social Security, Medicare, free college, subsidised housing, cradle-to-grave welfare, etc., by demanding that the rest of the world spend 19% OF THE GLOBAL GDP EVERY YEAR ON US TREASURIES beginning in 2020 while we sit on our couches eating Twinkies watching American Idol while our solar-panel-generated air conditioners are blasting away because ‘we are so trying to save the planet, fighting for a woman’s right to choose, believe in SSM, and protecting the oppressed Muslims from those dastardly Middle Eastern Christians and the JOOOOOOOOOS, man’ is perfectly acceptable.

People need to understand the facts. The sequestration was enacted during the debt ceiling debate in 2012. This was going to happen regardless of the tax increase discussions that happened this year. The GOP has raised income taxes on the wealthy and received nothing in return, but empty promises. Now, the Democrats are yelling for more tax increases. They need to hold up their end of the bargain and reform some of our entitlement programs.
Let people understand without these reforms, this will turn out the same way Detroit’s issues will turn out.

Baucus and Hatch promised their colleagues that some of the details of these Hill negotiations would remain secret for fifty years.

There’s a problem that may require a constitutional amendment!!!

These clowns work for us, ergo they can’t try to keep anything secret from us. Everything discussed should be released before the applicable votes. Even on national security save severely limited exceptions, but certainly the framework etc without the sensitive details.

The Baucus-Hatch plan in the Senate would challenge legislators to have to defend special interest tax subsidies on an individual basis.</blockquoteThat may be true, but If that's what Baucus and Hatch wanted then they wouldn't negotiate in secret.

Reid and Schumer can go to hell! They want an additional trillion on top of the $600 billion they just got…screw them! Where do they think this additional ‘revenue’ is going to come from?

It seems on the other side of the pond, Spain has gone to new heights in stupidity. They have found it necessary, so that consumers keep buying from energy producers, to…and this is NO joke…TAX the SUN by royal decree. The possible penalty for setting up your own home solar panels without approval, 30 million euros!

The Secretary of State for Energy, Alberto Nadal, signed a draft royal decree in which consumption taxes are levied on those who want to start solar power systems on their rooftops. The tax, labeled a “backup toll” is high enough to ensure that it will be cheaper to keep buying energy from current providers.

I guess that is one way to ensure that solar takes off in Spain or Europe, make it cost prohibitive for anyone to do it themselves.

OK, how about a flat tax with no exemptions that draws in $1e12 more per year? Over all that would still be a break even or win for most of America, it would free up money for people who create jobs, and likely heavily boost the economy.